Wisconsin native, conservative critic of everything.
"Once abolish the God, and the government becomes the God." ---G K Chesterton
"The only objective of Liberty is Life" --G K Chesterton
"Fallacies do not cease to be fallacies because they become fashions" --G K Chesterton
"A man can never have too much red wine, too many books, or too much ammunition." -- Rudyard Kipling

Monday, June 21, 2010

Doh! Middle Class Pays Lotsa Taxes

Middle-class Americans--not the rich or the poor--pay the majority of annual tax revenues taken in by the federal government, according to data released in a new Congressional Budget Office study.

...households that earned between $34,300 and $141,900 paid 50.5 percent of all federal tax revenues in 2007 ...households that earned between $34,300 and $352,900 paid 66.7 percent of all federal taxes

That means total taxation, including SocSec, Medicaid, and excise taxes, not just "income" tax.

Households earning less than $34,300 paid an average overall federal tax rate of 10.6 percent, while households earning more than $74,700 paid an average overall federal tax rate of almost two and half times that much--25.1 percent.

Of course, if you subtract SocSec/Medicaid and excise, the picture changes.

When it comes to the federal income tax alone (as opposed to Social Security, Medicare, excise and other taxes) the lower income brackets actually paid a negative rate, thanks to programs such as the Earned Income Tax Credit that paid people a “credit” for income taxes they never paid. The average federal income tax rate for households earning less than $34,300, according to the CBO., was -0.4 percent in 2007, and the average federal income tax rate for households earning less than $20,500 was -6.8 percent.

Good clarification on the "who pays taxes" question.

And CBO shows that 'top quintile' taxpayers (those earning over $74K/year) are paying more in taxes.

The share of overall federal taxes paid by each of the first four quintiles decreased from 1979 to 2007, while the share of overall federal taxes paid by the highest-income quintile increased, meaning the overall tax burden was shifting away from that class of Americans making less than $74,700 per year in 2007 toward those earning more.

The chart at the link shows top quintile taxpayers contributed a minimum (1982) of 55% of Federal tax revenues and it's gone up almost every year since, now totaling 68.9%.